2026 Policy Address: Tax Incentives Approved by the Value a Company Brings
The 2026 Policy Address proposes a 5% or half-rate concessionary tax for companies in key industries, approved by their investment plans and substantive contribution to Hong Kong, for up to five years. Key points from the Secretary for Financial Services and the Treasury's 5 October briefing to LegCo.
The Chief Executive delivered the Policy Address on 16 September 2026. Invest Hong Kong’s summary says that, to attract companies to Hong Kong, tax incentives will no longer be granted only by industry, but approved according to the value a company brings. On 5 October the Secretary for Financial Services and the Treasury gave more detail on the proposed regime to the Legislative Council Panel on Financial Affairs. The key points announced so far are below.
Who can benefit?
The proposed regime targets companies in these key industries:
- Advanced manufacturing
- Innovation, technology and R&D
- Headquarters activities
- Logistics and supply chain management
- Finance
Both companies newly setting up in Hong Kong and those already operating here can apply.
What is the incentive?
Beyond basic requirements (such as carrying out qualifying activities and meeting minimum thresholds for operating expenditure and full-time employees), a company whose investment plan and substantive contribution to Hong Kong’s economy meet set conditions may be granted a concessionary rate of 5% or half the profits tax rate (8.25% for corporations), for up to five years.
How are applications made and approved?
- Companies submit their Hong Kong business plan through Invest Hong Kong and the Office for Attracting Strategic Enterprises;
- Applications are approved by a steering committee on incentives for attracting industries and investment, led by the Financial Secretary;
- Factors include the company’s scale, nature and business plan;
- Approved companies must meet requirements such as expenditure and number of full-time employees, and may be subject to additional conditions case by case.
The Secretary described the proposed regime as “highly selective” — not every company will be approved.
Relationship with existing preferential regimes
The Government says the proposal complements the existing industry-specific regimes for finance, shipping, aviation and other sectors; eligible companies can continue to enjoy those without prior approval.
Timetable
On 5 October 2026 the Secretary said the Government plans to introduce a bill to amend the Inland Revenue Ordinance (Cap. 112) into LegCo in December 2026, aiming to implement the regime from the 2027/28 year of assessment. The speech did not set out full provisions or thresholds; eligibility and commencement are subject to the bill as published, the final law and official guidance.
What can companies do now?
Companies interested in applying can start organising their Hong Kong investment plan, projected operating expenditure and headcount, and watch for announcements from Invest Hong Kong.
Sources
- Inland Revenue Department (reproduced): opening remarks by the Secretary for Financial Services and the Treasury at the LegCo Panel on Financial Affairs, 5 October 2026 (Chinese) https://www.ird.gov.hk/chi/ppr/archives/26100501.htm
- The Chief Executive’s 2026 Policy Address: highlights https://www.policyaddress.gov.hk/2026/en/highlight.html
- Invest Hong Kong: 2026 Policy Address https://www.investhk.gov.hk/en/news/2026-policy-address-a-strategic-vision-for-a-bright-new-era-driving-reform-and-boosting-development-unleashing-opportunities-and-enhancing-livelihood
General information only, not legal or tax advice.